The rumors tonight were that Microsoft will acquire semantic search engine Powerset for north of $100 million. If the deal happens, it's not a total shock. There were rumors of a potential acquisition last month at the time Barney Pell and company rolled out their prototype search of Wikipedia.
I'm not sure that I understand the logic behind the deal, though perhaps it's simply intended to keep Google from acquiring the technology. But adding semantic search technology to their LiveSearch won't solve Microsoft's (NASD:MSFT) problems. Their problem in the search market is that no one uses their technology. Buying a lab experiment won't change that. I also remain skeptical that Powerset technology really scales. Having worked in the semantic tagging space for four years, I've seen the challenges in making that model work across disparate content sets.
Now, $100 million is not a significant acquisition for Microsoft, so perhaps they're just looking at it as a lab experiment. And it may be that over time they will find ways to leverage the Powerset semantic technology across Microsoft products, perhaps integrating it into the FAST platform for enterprise search. But for those who may tout this as a way for Microsoft to get back into the web search market, I think they'll be disappointed.
UPDATE: TechCrunch reports that the deal is done. Still doesn't do anything to help Microsoft's position in the web search space and I doubt that Powerset will ever get out of the sandbox, but $100M to MSFT is just not that big of a deal.
